The “Decade of Forestry”

That’s how Dr. Lynn Michaelis, president of Strategic Economic Analysis and nationally recognized forestry economist, describes the next 10 years.

The market trends he identifies in today’s Albany Herald are familiar (increasing housing starts in the U.S., growing fibre deficit in China, shrinking fibre supply in Canada). What’s more thought-provoking (if not deflating, in the face of beetlemania in B.C.) is the certainty with which he predicts that the Southern U.S. forest products industry will be the big winner. Echoing much of what Interfor’s Martin Jurvasky told us back in April, Michaelis explains just how Georgia’s abundance of trees is poised to fill the gap.
See: Forest business gives Georgia solid lead.

“It’s all about capacity.”
– Ted Seraphim, President & CEO, West Fraser Timber,
at the 2014 COFI Conference

Illusions

Yesterday we learned that a local Vancouver couple is off to compete with the best magicians on the continent. Their original illusions are aimed at presenting creations that seem real. It’s no secret that statistics presenting data related to housing activity can be just as mystifying.

The Chief Economist Of Housing Research at Metrostudy has now suggested in this interview on Bloomberg Radio that the weak housing statistics of late do not corroborate with Metrostudy’s ‘on-the-ground’ findings. Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide; we’re told they survey single-family residential subdivisions and perfected the lot-by-lot survey methodology that sets the industry standard today (HT: Mark Kennedy, CIBC).

It’s been suggested that lumber traders in all regions share a common interest in welcoming a little magic to spur market interests this summer.

“The bigger-than-expected (GDP) gain further cemented views that the decrease in America’s overall output during the first quarter was most likely a fluke tied in large part to unusually stormy winter weather and other anomalies.”
US Economy Grew at 4% Rate in Second Quarter, Beating Expectations. New York Times.

“Home prices across the U.S. are poised for a fifth consecutive year of recovery. The market is still faced with low inventory and demand, buoyed by an expanding economy, which, among other factors, remains healthy. Both supply and demand conditions are moving from extreme bullish conditions to healthy conditions.”
Altos: Critics wrong about housing, it’s going to soar. HousingWire.com

Easy Credit

It’s summertime, and the song I heard on the radio recently promised ‘easy livin’ but no ‘easy credit’. Unfortunately Summertime promises no new insights on the U.S. housing market’s reported stall.

Based on recent data, anticipated improvement in housing activity has been hampered in large part because of credit restrictions. According to Zillowcredit availability is the biggest issue in the housing market today. Mark Kennedy, CIBC confirms “employment is improving, payment burdens from student loans are gradually declining, but credit standards remain the challenge.” The Street explains why U.S. banks are wary of making loans.

Conversely, the easy credit – not to be confused with ‘easy livin’ – is said to be found in Canada’s easy credit fuelling our condo economy. Cash-back mortgage schemes are available (where the lender provides the 5% required down payment in exchange for a higher rate) – or the down payment can be borrowed from a line of credit, personal loan, or credit card.

Could a fundamental shift in housing preferences among younger Americans also be contributing to sluggish single family housing starts? Construction is largely demand-driven, and “some have argued that the Great Recession resulted in a profound shift in preferences for millennials toward renting,” according to Jason Furman, chairman of the Council of Economic Advisors (HT: Mark Kennedy)

Conversely, here in Canada, kids are buying condos before they get cars. The scenario has some analysts expressing increasing concern over what happens when there’s a shift away from easy credit.

A Final Winton Chapter

The storied history of how Winton introduced long lengths SPF fingerjoint to lumber markets across the continent sees confirmation of a chapter closed with the advertisement of a two-day auction in Prince George next month. See: Winton Global Major Planer Mill and Fingerjoint Plant Closure Auction.

When I forwarded the above link to my dad, he replied, “No doubt there be a few lumber traders who will recall sales manager Paul Williams’ work at Winton, along with Lou Huettl’s dedicated efforts, that introduced their fingerjoint product to market.”

Ernie attached a poem which he prepared and presented at a retirement celebration for Williams back in 1987. Archived below, it is reflective of a time when there were new systems, innovations, and advances on many fronts in the forest industry:

 

Paul Williams Retires

Marketing’s a concept – much more than merely selling.
Most fail to understand it – just too busy felling.
But forty years one worked at shaping a tradition
With dedicated energy – a Minnesota mission.
Paul Williams spoke of loyalty, of quality and trust –
Value-adding info – like, “Zinc lumber bands don’t rust”.
Like Lou, so long before him, Paul built a common bond
With family of customers… (and wholesalers belonged).
A lumberman of difference, dependable and true,
Qualities of character – found these days in few.
He spread the Winton gospel, through strong and weak demand.
Their creamy textured tuba twelve, now sought throughout the land.
While railroads and the futures markets talk about contracts
He called for understanding, through personal contact.
We’ll miss your timed appointments – planned care in each convention –
Travelling may be different now… (and Rose gets full attention).
But when there’s deep regret at leaving “Random Lengths” behind
Or, if a tear should surface when Iris comes to mind,
Think of Winton winter, Prince George ice and snow –
See boys counting inventory – at fifty-one below –
Remember planer shavings, measured then knee deep –
Less lasting joy than little shavers playing at your feet.
And when the family ’round you – on nights that it might rain,
Should talk of new grandchildren – and joy of labor pain –
Tell them the storied details – slowly – to a point
How you and The Pas Lumber gave birth to fingerjoint.

– Written by Ernie Harder,
on the occasion of Paul Williams’ retirement from
The Pas Lumber – Winton Sales (July 28, 1987)

Climate Change and Beetles

The ongoing impact of beetle-killed forests continues to make news. A five-year project headed up by B.C.’s leading universities is learning that forests killed by the mountain pine beetle are hampering the ability of the province’s 55 million hectares of forest to capture atmospheric carbon. In a Vancouver Sun column by Randy Shore today, we’re told “the combined effect of the pine beetle on lost carbon storage activity and emissions from decay in the dead pine forests exceeds carbon emissions from all other sources in B.C., about 65 million to 70 million tonnes of carbon dioxide equivalents.” The Pacific Institute for Climate Solutions (PICS) is one of the leaders in the project, pulling together the intellectual capital of the province aimed at integrating multi-disciplinary approaches to climate change.

We’re told that climate change scenarios are complicating the work of forest management and regeneration while presenting opportunities to understand what future forests might look like. It’s serious business. Climate change includes realities of what is described in the report as a climatic ‘comfort zone’ for some species of trees seen shifting north. How soon could it be that orange groves dot the landscape from Quesnel to Chetwynd?

“Through the ’90s, B.C. forests were a net sink for carbon, storing far more than would be emitted by fossil fuel burning. Since the spread of the mountain pine beetle, they have become a net carbon source. That’s because hundreds of millions of trees are no longer able to take up carbon, but are just decomposing.”
– Werner Kurz, lead scientist, Canadian Forest Service

Beetle Invasions

In 1964, it was a different kind of beetles invasion when the phenomenon that became known as Beatlemania struck North America. How ironic then that today, a pine tree planted in 2004 to honor former Beatle George Harrison has reportedly been killed — by beetles.

The memorial tree in Griffith Park, Los Angeles, had grown to more than 10 feet tall before the beetles took over, according to the L.A. Times: “The sapling went in, unobtrusively, near the observatory with a small plaque at the base to commemorate the former Beatle, who died in 2001, because he spent his final days in Los Angeles and because he was an avid gardener for much of his adult life.” Date for replanting TBA.

Could it be that Paul McCartney’s hit “Yesterday” was about a time when there were no concerns about the spread of any ‘beetlemania’?

Weekend Wildfires

Fires in B.C.’s vast beetle-killed stands of pine are burning hotter and faster than typical forest fires, reports The Vancouver Sun here. Daniel Perrakis, a research scientist with the B.C. Ministry of Forests, tells us that the unpredictable behaviour of these beetle-kill fires creates added uncertainty for fire fighters. The older the dead timber, the greater the risk of falling trees. Water and fire retardants are also less effective.

On the heels of Mayor Gerry Thiessen’s update regarding fire control measures, it’s interesting to learn in the report that test fires were conducted just south of his Vanderhoof community. Those tests reportedly found that fire spreads over two and a half times faster in beetle-killed stands than in healthy trees, and burns with higher intensity. Bark on these “crackling-dry” grey trees easily pulls away from the trunk, sending more embers into the air which jump fire breaks, lakes, and rivers. We’re told that scientists expect these intensified fire problems caused by the beetle epidemic to last 15 to 20 years.

Fortunately the Douglas Lake Ranch, where Dakeryn Industries just spent a weekend Company retreat, was not threatened with fires or evacuation orders. The area is part of B.C.’s interior land mass comprised of half a million acres of protected and managed land base, where we found plenty of room to stretch our legs, breathe fresh air, and test the rainbow-rich waters of Stoney Lake.